Mark S. Ferber's questionable business dealings while he worked at Lazard Freres & Co. reached beyond his work with Massachusetts issuers and Merrill Lynch & Co. to include relationships with issuers in other states and other investment banks, according to the Massachusetts inspector general's report released last week.
The report indicates that Ferber, who is under investigation by Massachusetts and federal officials for his role as a financial adviser, took credit for fees collected by Lazard Freres on hundreds of transactions in 12 states and from three investment banks in addition to Merrill Lynch and First Albany Corp.
Ferber was a partner at Lazard Freres and ran the firm's Boston office before leaving for a post at First Albany in January 1993. First Albany fired him that summer. The inspector general's report includes a complete listing of Ferber's accounting in an appendix to the report.
Officials at two of the firms mentioned in the documents, PaineWebber Inc. and Prudential Securities Inc., did not return calls for comment yesterday.
Bernard Beal, president of M.R. Beal & Co. in New York, the third firm listed in the report, said Lazard Freres and his firm provided advisory services to the District of Columbia.
The fees and transactions listed by Ferber include some from his work as a financial adviser, but also income from agreements with Merrill Lynch and First Albany and underwriting fees generated when Lazard Freres was included in bond syndicates for issuers across the country.
The documents leave many questions unanswered, and several of the issuers and firms that were participants in the transactions Ferber listed say they never worked with Ferber or anyone else in Lazard Freres' Boston office.
The inspector general is scrutinizing Ferber's claims that his office should receive credit for fees generated by Lazard Freres' underwriting team in New York, sources familiar with the investiption said.
That is because, in one instance, Ferber told Meff ill Lynch officials that they could please him by allocating bonds to Lazard Freres on underwritings where Meffill was the senior manager.
Ferber kept emphasizing throughout the conversation that Meffill Lynch would do him a favor by giving Lazard bonds with his name on them' because he is compensated in overall production," according to a Merrill official quoted in the inspector general's report.
The inspector general's report's Appendix II includes a list of all the fees Ferber took credit for between 1988 and 1992.
For example, the list includes fees of more than $150,000 that Lazard collected for participating in bond underwriting syndicates on four issues from the New York State Dormitory Authority in 1990.
Lazard was not the bookrunning senior manager on the deals. The bookrunner negotiates directly with the issuer to decide which orders will be filled, how a deal will be priced, and how much underwriting commission will be paid to each firm in the syndicate. An issuer may allocate all of the underwriting fees or leave some or all of the allocations to the bookrunner.
Officials at some of the firms that ran the books for the four dormitory authority deals said they had no idea why Ferber was taking credit for Lazard Freres' share of the underwriting fees, but declined to discuss the matter on the record.
Thomas A. Devane, deputy executive director for planning and financial analysis for the Dormitory Authority, said that Ferber "may list me as a client, but I am telling you I have never met the guy."
Devane said he dealt with Deborah Buresh, a close associate of Ferber's at Lazard Freres, and John Tamagni and Michael Delgiudice, partners in the firm's public finance office in New York.
According to internal documents, Ferber also took credit for underwriting fees that his firm received on deals by the New York State Environmental Facilities Corp., and listed the corporation as a "client" from 1990 to 1992.
David Liebschutz, director of marketing and special projects for the Environmental Facilities Corp., said the corporation had no association with Ferber.
"Lazard was an underwriter, but as far as I know, Mark really wasn't involved," Liebschutz said. He said that Kenneth Gibbs, a close associate of Ferber's at Lazard, and Michael DelGiudice, worked with the corporation.
Some of the other transactions listed in Ferber's accounting include work by Gibbs.
Many of the fees listed cover Ferber's work as a financial adviser for issuers including the Massachussets Water Resources Authority, the District of Columbia, and the state of Wisconsin.
After the contract between Merrill and Lazard Freres was disclosed, officials in Wisconsin and the district conducted their own investigations into the two firms' conduct.
Frank Hoadley, Wisconsin's capital finance director, said the latest news reports about Ferber's alleged activities do not change the state's earlier conclusion that there were no conflicts of interest in the state's three-year dealing with Lazard Freres and First Albany as its financial advisers.
"I don't see anything that changes any of the conclusions that we came to," Hoadley said.
In an Oct. 4 letter to Kenneth Gibbs, who was the state's key contact, first with Lazard Freres and then with First Albany, the state exonerated the two firms, saying, "there was no undisclosed conflict of interest or appearance of impropriety" in their dealings with the state.
However, Hoadley on Friday and in the October letter acknowledged that the state did find some fault with the firms' relationship with the Massachussets Water Resources Authority.
From 1990 until early this year, Lazard Freres and Gibbs, who was then a senior vice president at the firm, served as financial adviser on specific stated bond issues.
Following the departure of Gibbs and others to First Albany in February, and following a request for proposals process, First Albany was selected along with three or other firms in July to be Wisconsin's financial adviser for the next year.
The inspector general's report also alleges that Ferber traded his influence with the Water Resources Authority to elbow into swap transactions with Merrill Lynch.
Merrill Lynch officials and Ferber's attorney yesterday denied that any "quid pro quo" existed.
After helping Merrill officials prepare for an upcoming underwriter selection process with the authority in 1989 and 1992, Ferber asked Merrill to return the favor and provide benefits to him, the inspector general's report says.
Merrill Lynch said yesterday in a prepared statement that it did not receive any information from Ferber that was not also available to other firms competing for the underwriter slots.
A Merrill Lynch official said Ferber asked Merrill to include him on transactions "especially outside of New England," and, according to documents obtained by the inspector general, warned Merrill "that without a return on his investment, he will hurt us."
April Hattori contributed to this article.
